In 2025, the controller of Green Company discovered that 2024 depreciation expense was overstated by $40,000, a material amount. Assuming an income tax rate of 25%, the prior period adjustment to 2025 beginning retained would be:

In 2025, the controller of Green Company discovered that 2024 depreciation expense was overstated by $40,000, a material amount. Assuming an income tax rate of 25%, the prior period adjustment to 2025 beginning retained would be:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

In 2025, the controller of Green Company discovered that 2024 depreciation expense was overstated by $40,000, a material amount. Assuming an income tax rate of 25%, the prior period adjustment to 2025 beginning retained would be:

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

AI-Generated Solution

AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.

Unlock instant AI solutions

Tap the button
to generate a solution

Click the button to generate
a solution

SEE SOLUTION

Similar questions

SINCO Ltd. purchased a piece of equipment in the year 2018 for the sum of $ 200,000. The company is subject to a tax depreciation rate of 25%. According to the following table, what is the depreciation allowance that this company can claim in 2020? (in the following picture : Année is year)
Dengar
Fore Farms reported a pretax operating loss of $204 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $10 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Taxable income in Fores’s two previous years of operation was as follows: 2022 $ 92 million 2023 $ 68 million Required: Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024. Assume Fore will carry back its NOL to prior years. What is the net operating loss reported in 2024 income statement? Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $232 million. No…
Assume that Maddox Corporation buys new equipment for $15,000 on January 1, 2021. Depreciation for book purposes using the SL method is $3,000 per year. For tax purposes SYD is used with depreciation of $5,000 in 2021 and $4,000 in 2022. Depreciation is the only book - versus - tax difference. Income before depreciation and taxes is $30,000 each year over the next five years and the statutory tax rate is 35% for 2021. The tax rate increased to 40% in 2022. Calculate the increase in the deferred tax liability for 2022. Multiple choice question. $1,200 $250 $700 $500
Ivanhoe Corporation has a deferred tax asset at December 31, 2026 of $210000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 30% for 2023-2025; 25% for 2026; and 20% for 2027 and thereafter. Assuming that management expects that only 50% of the related benefits will be realized, a valuation account should be established in the amount of O $36750. O $31500. O $105000. O $42000. of
Fore Farms reported a pretax operating loss of $300 million for financial reporting purposes in 2021. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2021 and (b) an estimated loss of $20 million from accruing a loss contingency. The loss will be tax deductible when paid in 2022. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2021 other than those described above. Taxable income in Fores’s two previous years of operation was as follows: 2019 $ 136 million 2020 $ 112 million Required:1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2021. Assume Fore will carry back its NOL to prior years.2. What is the net operating loss reported in 2021 income statement?3. Prepare the journal entry to record income taxes in 2022 assuming pretax accounting income is…
None
Doug Smith Industries purchased warehouses for $121 million (no residual value) at the beginning of 2021. The warehouses were being de year life using the sum-of-the-years'-digits method. At the beginning of 2024, management decided to change to straight-line. Ignoring tax entry will include a debit to depreciation expense of: Note: Round your answer to 2 decimal places. 3:20 Multiple Choice $12.10 million. $8.80 million. $61.60 million. $59.40 million.
Altima Corporation discovered an error in its 2020 financial statements. The firm recorded $4,200,000 in depreciation expense instead of record $4,500,000. Altima has a constant tax rate of 40% and reports 3 years of comparative income statements and 2 years of comparative balance sh- in its annual report. Ignoring the income tax effect, what is the correct journal entry to record the prior-period adjustment? O Depreciation expense Accumulated Depreciation O Retained Earnings 300,000 Income Tax Payable Accumulated Depreciation Retained Earnings O Accumulated Depreciation 300,000 Retained Earnings Accumulated Depreciation 300.000 estion 22 300,000 300,000 120.000 180,000 300,000 300,000
Ivanhoe Ltd. purchased a piece of equipment on January 1, 2019, for $1,275,000. At that time, it was estimated that the mad would have a 15-year life and no residual value. On December 31, 2023, Ivanhoe's controller found that the entry for depreciation expense was omitted in error in 2020. In addition, Ivanhoe planned to switch to double-declining-balance depreciation beca change in the pattern of benefits received, starting with the year 2023. Ivanhoe currently uses the straight-line method for depreciating equipment. Ivanhoe Ltd. follows IFRS.
Fore Farms reported a pretax operating loss of $176 million for financial reporting purposes in 2024. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2024 and (b) an estimated loss of $10 million from accruing a loss contingency. The loss will be tax deductible when paid in 2025. The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above. Taxable income in Fores’s two previous years of operation was as follows: 2022 $ 80 million 2023 $ 56 million Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $208 million. No additional temporary differences originate in 2025.
Wildhorse Co. purchased machinery that cost $2850000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a 9-year life and a $185000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations.Wildhorse's income statement for the year ended December 31, 2021, should show the cumulative effect of this error in the amount of